I prepare income taxes, I know most of the people that trade do not make any money trading. Most have over a 100K in losses. These are people that we do their return. I have one guy that is a CTA and publishes a newsletter on when to trade and what and he does not trade at all.
Trading is very difficult so naturally there will be a significant % of people who just do not have the skill to do it just like golf, baseball, chess or any other activity which requires specialization, instinct and emotional fortitude. But is easy to see why beginners fail. They do because: 1) Lack of education- most start trading without a clue about the markets or even the product they are trading. For example, i come across many beginners in options who have real money in trades and know nothing about time decay, early assignment, option pricing or implied volatility. So most beginners fail because they jump in before they even know what they are doing. Imagine playing golf for the first time and not even knowing what tht difference is between the clubs. 2) Greed - most beginners start trading for the wrong reasons. The want 100% returns or to make a lot of money quickly with little or no work. that is why most fall for the get rich quick schemes. Unrealistic expectations is the biggest downfall for many beginners. They think this is easy and if you just subscribe to a newsletter or buy a software with pretty green and red lights they can make money without following rule #1 above and learn anything. 3) Emotional Instability- many beginners lack the fortitude to accept losses as inevitable or keep their emotions and ego in check. Many trade on pure emotion and ar emore prone to mistakes. it takes a long time to weed out emotions and become a mechanical type of trader. Fear and greed are the biggest emotional traps in trading and just like professional atheltes who can control their emotions to an extent in pressure situations, traders must also gain such control. 4) Lack of Self-Responsibility- many traders find fault in everytyhing but themselves when they lose money. Many lose money and do not look to their mistakes and end up blaming trading as a fool's game and write it off without learning anything. I learn the most from my mistakes and it is about accepting the mistakes I have made and realizing where the fault lies and correcting it to trade better. 5) Lack of succicient capital- many beginners use money they cannot afford to lose (which leads to #4) or too little capital to start trading and crap out quickly. LIke any new business venture you need enough cash to outlast the drawdowns and survive for the year. New traders need to have a long-term focus and realize they may have some losses in the beginning and enough capital is needed to survive and learn from those losses and become better. Most lose too fast and then move to #4 and say trading is a losing proposition. 6) Lack of Respect - many beginners feel trading is not hard at all or have no respect for the intricate detailed process and education and training that is required to trade. Many just have no comprehension of how much one needs to learn and adopt in order to be successful. People spend a lot of time learning a game such as golf or research like crazy for a new business venture, but many beginners walk into trading like it is nothing. It is a lack of respect for the amount of work required and the fact that there is no get rich quick approach or short-cut. You need to put in a lot of time and effort and you need to accept the fact that you will have losses at the beginning as you learn. With all these common traits of many beginners, it is no wonder that many struggle to even have slightly positive returns and #5 is why many crap out.
If your trading strategy is'nt making money, why not buy/subscribe to a trading system that is proven to work. Don't trade down your account while trying to develop a workable trading strategy, hop onto one that is working. Going into it new, it takes time to make sense out of the market, and to know how stocks trade. You will not learn this in a few months. And nobody in their right mind will show you their trading strategy, you will not get it that way. A guy had the gall on the Collective2.com message board to insist that a certain system vendor there tell him what technical indicators he uses, and makes a fuss when the guy would'nt tell him. I would'nt even tell him what make computer I use.